Alaska Trademark Shellfish, LLC, et al. v. State of Alaska, et al.

This case requires us to determine whether Alaska law gives shellfish
farmers the exclusive right to harvest wild stocks already growing on their farm sites.
Several applicants asked the Alaska Department of Fish and Game for aquatic farm
permits allowing them to grow and commercially harvest geoduck clams in Alaska
waters. When the Department of Fish and Game declined to give them exclusive
rights to the wild geoducks on their proposed farm sites, the applicants appealed to
the superior court. The superior court upheld the department's decision, concluding
that the Alaska Constitution bars the department from giving geoduck farmers
exclusive rights to commercially harvestable stocks already on their farms. The
applicants filed this appeal. We affirm the superior court's ruling but rest our
decision on narrower grounds, holding that, no matter what the constitution might
permit, the department lacked statutory authority to give aquatic farmers exclusive
rights to the existing wild stocks.

II. FACTS AND PROCEEDINGS

Alaska's Aquatic Farming Act1 sets out procedures for obtaining permits
to start aquatic farms in Alaska waters. The act puts the Department of Fish and
Game in charge of the permitting process, which includes the issuance of a coastal
zone consistency certification, an aquatic farm lease, a special area permit, an aquatic
farm operation permit, and a stock acquisition permit. In the case at issue here,
Alaska Trademark Shellfish, LLC, applied to the Department of Fish and Game for
aquatic farm permits to allow the company to raise geoducks - an unusually large,
slow-growing species of clam that commands high market prices - on several

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proposed farm sites in Southeastern Alaska waters; at about the same time, several
other applicants requested permits in various different locations. In prior
communications with prospective shellfish farmers, the department had suggested
that applicants who received permits would be given the right to take all wild stocks
already on their farms when the permits were issued. Thus, in the present case, most
of the applicants proposed to harvest and sell the wild geoducks already growing on
their selected sites.

After reviewing the applications, the department notified the applicants
that it would conditionally approve their permits: each applicant would be required to
develop a practical method of distinguishing their farmed geoducks from the wild,
"common property," geoducks already on their property; and each applicant would
have to agree to use their proposed method when they started farming. The
department explained that it believed these conditions to be necessary "[b]ecause the
density of geoducks on your site may exceed that necessary to provide seed stock for
propagation." Specifically, the department stated, "it is likely that a portion of the
wild geoducks at your proposed sites would remain a common property resource,
which should be made available for other uses." The department asserted that the
Aquatic Farming Act allowed aquatic farmers to take wild resources from their sites
only if they were issued a stock acquisition permit under AS 16.40.120, which, in the
department's view, allowed farmers to use existing stocks solely to "further growth"
and for "propagation." According to the department, allowing aquatic farmers a
broader right to harvest standing stocks might violate the Alaska Constitution:

It is important to clarify that an aquatic farm permit
does not, in itself, give a farmer the exclusive right to
harvest, for a commercial purpose, the wild fishery
resources that are located at the farm site. A contrary

2 The department eventually circulated these general principles as proposed
regulations and ultimately adopted them. 5 Alaska Administrative Code (AAC) 41.240
(2003). The validity of the current regulations is not at issue here.

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conclusion is inconsistent with the laws that govern aquatic
farming, and it may contradict the Alaska Constitution's
prohibition against exclusive rights in fisheries.

The applicants responded that they found the department's conditions of
approval to be unreasonable. They proposed several alternative arrangements.

After
holding a teleconference to discuss these and other options, the department sent the
applicants a letter summarizing the general principles that it proposed to use to "guide
the department's actions on your pending permit applications."2 For present
purposes, the most important principle was that the department would permit the
applicants to use existing geoducks only for brood stock or for active cultivation:

Pertinent statutes do not authorize a farmer to use
standing, wild stocks of geoducks for harvest and sale
without having first "propagated, farmed, or cultivated" the
wild geoducks. The statutes define an "aquatic farm" as "a
facility that grows, farms, or cultivates aquatic farm
products in captivity under positive control." It would not
be consistent with those statutes to allow a farmer to
harvest wild geoducks without first having done anything
to improve their abundance, growth rate, or any other
aspect of productivity. Therefore, the department will
issue stock acquisition permits only for the purposes of
providing brood or seed stock or for growing-out under
controlled, enhanced cultivation.

The applicants replied that the department's proposal to condition
approval of their applications on these principles would preclude them from operating
successfully. They demanded an unconditional decision on their pending
applications. In response, the Commissioner of Fish and Game issued a final decision

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denying the permits, ruling that the applicants had no right to claim wild geoducks
already on their proposed sites:

The practical difficulties of choosing to operate an aquatic
farm where there [is] an abundance of wild stocks of
geoducks do[] not provide a basis for circumventing state
law with regard to a common property resource. An
aquatic farmer cannot, under state law, harvest wild
geoducks that [the applicant] has done nothing to cultivate
under the auspices of an aquatic farm permit. The Alaska
Constitution and statutes that govern aquatic farm
operational permits prohibit the harvest of standing stocks
of wild geoducks, unless the farmer has a valid stock
acquisition permit (which can be obtained under limited
circumstances) or if the farmer has cultivated the wild
geoducks.

The applicants appealed the commissioner's decision to the superior
court, insisting that the department had violated the Aquatic Farming Act by
conditioning their farm operation permits on their willingness to make wild geoduck
stocks available for common use. Alternatively, the applicants argued, the
department should be estopped from prohibiting them from harvesting their standing
stocks, since its earlier communications had promised that all successful applicants
for shellfish farming permits would automatically receive the right to harvest wild
stock.

Superior Court Judge Michael A. Thompson affirmed the
commissioner's ruling, relying on a constitutional theory. Finding that "[t]he real
question . . . is not whether the legislature intended to allow [stock acquisition permit]
holders to harvest wild stock, but whether the legislature is permitted to do so," Judge
Thompson passed over the disputed statutory issues, ruling instead that the Alaska

3 Alaska Const. art. VIII, § 3.

4 Alyeska Pipeline Serv. Co. v. DeShong, 77 P.3d 1227, 1231 (Alaska 2003).

5 State Commercial Fisheries Entry Comm'n v. Carlson, 65 P.3d 851, 858
(Alaska 2003).

6 Alaska Const. art. VIII, §§ 3, 15.

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Constitution's common use clause3 precluded the department from giving geoduck
farmers exclusive harvest rights to any commercially significant wild geoduck stocks.

The applicants appeal this decision.

III. DISCUSSION

A. Standard of Review

In resolving administrative appeals from decisions issued by the superior
court as an intermediate appellate tribunal, we review the administrative agency's
decision directly.4 We apply our independent judgment to decide questions of law
involving statutory and constitutional interpretation.5

B. Parties' Arguments

The applicants challenge the superior court's ruling that the Alaska
Constitution's common-use clause forbids giving newly permitted geoduck farmers
harvest rights to geoduck stocks already growing on their farms. They maintain that
the superior court misunderstood the relationship between the Alaska Constitution's
common-use clause and no-exclusive-right clause.6 Pointing to cases like State v.

7 667 P.2d 1184 (Alaska 1983).

8 763 P.2d 488 (Alaska 1988).

9 755 P.2d 1115 (Alaska 1988).

10 785 P.2d 1 (Alaska 1989).

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Ostrosky,7 Owsichek v. State,8 CWC Fisheries v. Bunker,9 and McDowell v. State,10
the applicants insist that the common-use clause and public trust doctrine do not
prevent the department from giving standing stocks to aquatic shellfish farmers.
Alternatively, the applicants argue, estoppel bars the department from denying their
applications.

The state counters by arguing that the court's constitutional analysis was
sound. Alternatively, renewing the statutory arguments that the superior court
declined to decide, the state asserts that the Aquatic Farming Act does not give the
department authority to grant exclusive standing-stock rights to the applicants.

C. Procedural Objections to a Decision on Statutory Grounds

The applicants raise a procedural objection to the state's statutory
argument. They maintain that the state cannot properly rely on this theory, since the
superior court declined to decide it and since the theory is not raised in the applicant's
statement of points on appeal. The applicants urge us to confine our review to the
constitutional issue decided below. Alternatively, they ask us to allow supplemental
briefing if we reach the statutory issue.

But the trial court's choice of a particular legal theory does not define
the scope of our appellate review. An appellate court may uphold the trial court's
judgment on any legal theory supported by the record - even one that the trial court

11 As we held in Ransom v. Haner, one of our earliest cases,
it is a rule of law that an appellee may urge, and the appellate
court should consider in defense of a decree or judgment any
matter appearing in the record, even if rejected below and
even if appellee's argument may involve an attack upon the
reasoning of the lower court or an insistence upon matter
overlooked or ignored by it.

362 P.2d 282, 285 (Alaska 1961). Our subsequent cases have consistently recognized
and applied this rule. See, e.g., Dixon v. Pouncy, 979 P.2d 520, 525 n.6 (Alaska 1999);
Bering Strait Sch. Dist. v. RLI Ins. Co., 873 P.2d 1292, 1295 (Alaska 1994); Municipality
of Anchorage v. Higgins, 754 P.2d 745, 748 (Alaska 1988); McGee v. State, 614 P.2d
800, 806 n.10 (Alaska 1980); Carlson v. State, 598 P.2d 969, 973 (Alaska 1979); Pistro
v. State, 590 P.2d 884, 888 n.13 (Alaska 1979); Stordahl v. Gov't Employees Ins. Co.,
564 P.2d 63, 67 n.16 (Alaska 1977).

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expressly rejects.11 Here, the state's brief discusses a statutory point that it properly
raised in the superior court. Both parties briefed and argued the point below.

Although the superior court elected to rest its ruling on constitutional grounds, we
have often recognized that appeals should ordinarily not be decided on constitutional

12 This principle of abstention is not unique to Alaska. See Escambia County
v. McMillan, 466 U.S. 48, 51 (1984) ("It is a well-established principle governing the
prudent exercise of this Court's jurisdiction that normally the Court will not decide a
constitutional question if there is some other ground upon which to dispose of the
case."); Ashwander v. Tennessee Valley Auth., 297 U.S. 288, 345-49 (1936) (establishing
that constitutional questions should be avoided if there are narrower grounds for making
a decision). Alaska's appellate courts have often invoked this principle. See, e.g.,
Municipality of Anchorage v. Anchorage Daily News, 794 P.2d 584, 594 n.18 (Alaska
1990) (civil rules constitute sufficient device for controlling discovery harassment, thus
decline to reach broader constitutional issue); State v. F/V Baranof, 677 P.2d 1245, 1255
(Alaska 1984) (since owners were afforded due process, need not address
constitutionality of statute); Zerbe v. State, 578 P.2d 597, 598 (Alaska 1978) (because
of disposition of first point on appeal, need not address constitutional issue), overruled
on other grounds by Stephens v. State, Dep't of Revenue, 746 P.2d 908 (Alaska 1987);
Puller v. Municipality of Anchorage, 574 P.2d 1285, 1288 (Alaska 1978) (in light of
construction of statute, do not reach constitutional issues); State v. City of Anchorage,
513 P.2d 1104, 1112 (Alaska 1973) (interpretation of statute makes it unnecessary to
reach constitutional issue), overruled on other grounds by State v. Alex, 646 P.2d 203
(Alaska 1982); Anniskette v. State, 489 P.2d 1012, 1016 (Alaska 1971) (since conduct
protected by constitution, do not reach broader question of statute's constitutionality);
Perry v. State, 429 P.2 d 249, 251-52 (Alaska 1967) (should not pass on constitutional
issue unless determination essential to decision of case); Robins v. Municipality of
Anchorage, 711 P.2d 550, 552 (Alaska App. 1985) (need not decide constitutional issue,
since probable cause for arrest existed prior to giving breath test); State v. Williams, 653
P.2d 1067, 1069 (Alaska App. 1982) (do not reach constitutional issue since case can be
resolved by applying Alaska Rules of Criminal Procedure), aff'd in part, 681 P.2d 313
(Alaska 1984).

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grounds when narrower grounds are available.12 Given
these circumstances, we reject the applicants' procedural objections. W e thus turn to
the statutory issues.

D. Relevant Statutory Framework

The Aquatic Farming Act authorizes the Department of Fish and Game
to issue permits for aquatic farming; conversely, the act prohibits aquatic farming

13 At the times relevant to this case, AS 16.40.100 provided:

(a) A person may not, without a permit from the
commissioner, construct or operate

(1) an aquatic farm; or

(2) a hatchery for the purpose of supplying
aquatic plants or shellfish to an aquatic farm.

(b) A permit issued under this section authorizes the
permittee, subject to the conditions of AS 16.40.100 -
16.40.199 and AS 17.20, to acquire, purchase, offer to
purchase, transfer, possess, sell, and offer to sell stock and
aquatic farm products that are used or reared at the hatchery
or aquatic farm. A person who holds a permit under this
section may sell or offer to sell shellfish stock to the
department or to an aquatic farm or related hatchery outside
of the state.

(c) The commissioner may attach conditions to a
permit issued under this section that are necessary to protect
natural fish and wildlife resources.
(d) Notwithstanding other provisions of law, the
commissioner may not issue a permit under this section for
the farming of, or hatchery operations involving, Atlantic
salmon.

14 See AS 16.40.100 and AS 16.40.120.

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except as permitted.13 The act authorizes the department to issue two distinct kinds of
permits: permits to operate aquatic farms and permits to acquire stock for aquatic
farms.14

1. Operation Permits

Alaska Statute 16.40.100 describes the first kind of permit, an operation
permit, providing, "A person may not, without a permit from the commissioner,

15 AS 16.40.100(a)(1).

16 See AS 16.40.100(b). Moreover, with respect to operating permits,
AS 16.40.100(c) gives the department broad discretion to "attach conditions to a permit
. . . that are necessary to protect natural fish and wildlife resources."

17 AS 16.40.199(2), (8).

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construct or operate . . . an aquatic farm."15 An operation permit issued under this
section allows aquatic farmers to acquire and sell "stock and aquatic farm products
that are used or reared at the hatchery or aquatic farm."16 The act assigns precise
meanings to the terms "aquatic farm product" and "stock":
"aquatic farm product" means an aquatic plant or
shellfish, or part of an aquatic plant or shellfish, that is
propagated, farmed, or cultivated in an aquatic farm and
sold or offered for sale;

. . . .

"stock" means live aquatic plants or shellfish
acquired, collected, possessed, or intended for use by a
hatchery or aquatic farm for the purpose of further growth
or propagation.[17]

In deciding whether to issue an operation permit under section .100, the
department must consider four criteria:

(1) the physical and biological characteristics of
the proposed farm or hatchery location must be suitable for
the farming or the shellfish or aquatic plant proposed;

(2) the proposed farm or hatchery may not
require significant alterations in traditional fisheries or
other existing uses of fish and wildlife resources;

(3) the proposed farm or hatchery may not
significantly affect fisheries, wildlife, or their habitats in an
adverse manner; and

18 AS 16.40.105.

19 AS 16.40.120(a).

20 AS 16.40.120(b).

21 AS 16.40.120(g).

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(4) the proposed farm or hatchery plans and
staffing plans must demonstrate technical and operational
feasibility.[18]

2. Stock Acquisition Permits

Alaska Statute 16.40.120 describes the second kind of permit required
for aquatic farming, an "aquatic stock acquisition" permit. Section .120 provides that
"[a] person may not acquire aquatic plants or shellfish from wild stock in the state for
the purpose of supplying stock to an aquatic farm or hatchery required to have a
permit under AS 16.40.100 unless the person holds an acquisition permit."19 An
aquatic stock acquisition permit enables permit holders to acquire w ild stock, but only
"for the purposes of supplying stock . . . to an aquatic farm or hatchery required to
have [an operating] permit under AS 16.40.100 . . . [or to] the department."20 Any
wild shellfish acquired under a stock acquisition permit "become the property of the
permit holder and are no longer a public or common resource."21

E. Department's Authority To Authorize Harvest of Wild Stocks

The state asserts that these statutes leave the department no authority to
grant shellfish farmers a right to harvest and sell the wild geoducks already
populating their farm sites. The state's argument has merit.
The act describes only two ways for the department to give - and for
aquatic farmers to receive - access to wild geoduck stocks: through an operation
permit issued under AS 16.40.100 or through a stock acquisition permit issued under

22 AS 16.40.100(b).

23 AS 16.40.120(b).

24 AS 16.40.199(8).

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AS 16.40.120. If the applicants have any claim to the wild stocks on their proposed
sites, then, their claims must arise under these provisions.

The operation permit statute, AS 16.40.100, neither states nor implies
that a right to harvest and sell wild stocks arises from an operation permit.

It allows
farmers to acquire and sell aquatic farm products and stock only when the products or
stock are "used or reared at the hatchery or aquatic farm."22 By requiring all aquatic
"farm products" and "stock" acquired or sold by an aquatic farm to be "used or reared
at" the farm, this provision precludes harvesting unfarmed, wild geoduck stock for the
purpose of sale. Similarly, no right to harvest wild geoducks for general commercial
purposes emerges under the stock acquisition permit statute, AS 16.40.120. As we
have seen, stock acquisition permits issued under this section only allow their holders
to acquire wild stock for limited purposes: to supply stock to the department or to a
licensed aquatic hatchery or farm.23

In arguing their case before the department, the applicants proposed
several theories for finding that a stock acquisition permit would authorize harvesting
and selling the wild geoduck stocks on their sites. For example, pointing to the act's
definition of "stock," which would only encompass geoducks that were "intended for
use . . . for . . . further growth or propagation,"24 the applicants suggested that the wild
geoducks they intended to harvest and sell w ould qualify as stock covered by their
acquisition permits because the geoducks would undergo "further growth" between
the time the permits were issued and the time the harvest and sale occurred. Yet by

25 Id.

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requiring stock to be "intended for use for further growth or propagation," the
statutory definition of "stock" demands something more than passive growth: its
express terms command an intent to "use" the wild stock "for" further growth.

These
purposive words unmistakably signal an intended use that will produce growth
through action - an active "use" of the stock by the farmer "for" promoting its
further growth. A mere waiting period between issuance of a permit and commercial
harvest would not meet this definition.

The applicants also claimed a right to harvest existing geoduck stocks
under another provision of the stock acquisition permit statute, AS 16.40.120(f). This
provision directs the department to issue a stock acquisition permit if "wild stock is
necessary to meet the initial needs of farm or hatchery stock." Contending that
commercially harvesting wild stocks is necessary to make geoduck farming a viable
enterprise, the applicants reasoned that subsection .120(f) would allow them to
receive permits to harvest wild geoduck stocks. Thus, in the applicants' view, the
department acted unlawfully in proposing to condition their permits on their
willingness to surrender existing geoduck stocks.
But this argument disregards the specific terms of AS 16.40.120(f).
Subsection .120(f) authorizes the department to issue acquisition permits for wild
stock when necessary to meet a farm's "initial needs of farm . . . stock." Hence, this
provision does not address a farm's general startup needs; it only addresses a farm's
initial needs for "stock." A "stock," as discussed above, may only be used "for
further growth or propagation."25 Here the applicants' proposal to harvest and sell

26 AS 16.40.199(2) and (8).

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wild geoducks from their sites and to plow their earnings back into their farms has no
direct relation to their initial needs for farm stock.
Nor do the applicants' arguments fare any better under the statutory
provision governing operation permits, AS 16.40.100. As already explained in
discussing the relevant statutory framework, an operation permit issued under
section .100 does not generally authorize geoduck farmers to sell wild geoduck
stocks; instead, it only permits them to acquire or sell "stock" and "aquatic farm
products" if they "are used or reared at the . . . aquatic farm." Although the applicants
maintained below that their proposed harvest and sale of wild geoducks would
amount to a "use" under subsection .100(b), their argument strains the statute's plain
meaning beyond plausible limits. Moreover, the argument disregards the need to
interpret subsection .100(b)'s references to "stock" and "aquatic farm products" in
light of AS 16.40.199's provisions defining those terms: to qualify as salable "stock,"
a wild geoduck would have to be "intended for use by [an] . . . aquatic farm for the
purpose of further growth or propagation"; and to qualify as "a farm product," the
geoduck would have to be "propagated, farmed, or cultivated in an aquatic farm."26

In short, no provision of the aquatic farming act empowers the
department to grant - or entitles the holder of an operation or stock acquisition
permit to claim - exclusive rights to harvest and sell existing wild geoduck stocks.
We thus conclude that the commissioner properly denied the disputed applications.

Our reliance on this statutory ground makes it unnecessary to decide whether the
Alaska Constitution would be violated by giving geoduck farmers exclusive rights to
existing w ild stocks.
27 See, e.g., State v. Schnell, 8 P.3d 351, 356 (Alaska 2000); Wassink v.
Hawkins, 763 P.2d 971, 975 (Alaska 1988).
28 Municipality of Anchorage v. Schneider, 685 P.2d 94, 98 (Alaska 1984)
(reinstating otherwise unlawful building permit by estoppel against Municipality when
warranted by strong equities and necessary to avoid injustice).
29 We find the applicants' reliance on State v. Schnell unavailing, since our
ruling there simply approved an application of estoppel to temper the state's otherwise
lawful disciplinary action against a licensee. 8 P.3d at 356.

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F. Estoppel

A final point of equity remains to be considered. The applicants assert
that the department should be estopped from denying them the exclusive right to
harvest wild geoducks because it repeatedly assured them that they would acquire the
right with their permits. Although the department vigorously disputes the applicants'
interpretation of its prior communications, we need not decide the dispute as to the
meaning of the department's statements. We have previously recognized that private
parties may invoke estoppel against the state in certain exceptional cases.27

But when
a party's request for estoppel would require the government to take unlawful or
otherwise unauthorized action, we have carefully restricted the defense's use to
circumstances in which the balance of equities manifestly favors the requesting party
and estoppel is necessary to avoid further injustice.28 Considering the totality of the
circumstances here, although the department's prior representations have
understandably caused considerable disappointment, we cannot say that the equities
weigh heavily in the applicants' favor; nor do we see any compelling need to invoke
estoppel as a means to prevent waste or avoid injustice.29

Thus, even assuming that the applicants reasonably interpreted the
department's prior representations as unequivocal promises, we conclude that the

30 In reaching this conclusion, we note that the applicants have advanced no
claims for narrower forms of equitable relief such as money damages tailored to
compensate them for direct costs actually sustained as a result of their reliance on the
department's prior representations; they have demanded only the unqualified right to
hold the state to its alleged promises to grant exclusive harvest rights.

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balance of the equities would fall well short of justifying an order compelling the state
to issue permits for exclusive fishing rights that the legislature has not authorized it to
grant.30